The Government should reverse latest cooling measure

From Hui Chi Shing – 10 hours 5 min ago

I agree with the writer, in “Why penalise private property players?” (Jan 30), that the latest round of cooling measures could well hurt industry players.

It may also deter some genuine long-term investors from the private property market, which may not be desirable, at least in the medium term if not immediately.

The previous rounds of cooling measures should have already suppressed speculative sentiments in the private property market.

While the further tightening of the Loan-to-Value limit will continue to drive away any remaining speculators and help to build a cushion in case interest rates pick up in the future, the increased Additional Buyer’s Stamp Duty (ABSD) may gradually lead to side effects.

Maintaining a free market is one of the critical factors for Singapore to attract local and foreign investors.

The increasing ABSD may start to give Permanent Residents and foreign investors the wrong message that their investments are no longer welcomed and that private property is also reserved for locals.

Once these non-local investors are turned away and move to other markets, the Government may have to provide extra incentives to lure them back when Singapore needs them.

If the population is expected to reach six million by 2020, long-term investors will have to play a pivotal role in ensuring a vibrant, healthy private property market.

What if few non-local investors are left to play this role?

The Government is working hard to avert an asset bubble. A market collapse triggered by weak demand, though, is as lethal to the economy.

The Government should continue to use public housing as the primary means to meet most Singaporeans’ housing needs.

While some Singaporeans might have voiced frustration in the past that private condominiums are beyond their reach, there should now be an abundant supply of executive condominiums (EC) to meet the demands of locals.

In fact, if an EC unit can be sold for over S$2 million, the Government should be less concerned about complaints that Singaporeans cannot afford private condos.

Some may query if the latest round of cooling measures is an overdose and if the Government should now let the private property market find its own balance without further interference.

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